1. Improper selection of Outsourcing partner: Negotiating an outsourcing contract involves a significant investment of time from beginning to end. At the stage of selecting the service provider it is sensible to enter the process with an aim of helping each vendor to put forward the best, most relevant offer possible which is within their capability. The vendor will put forward the best possible offer if he sees opportunity for future revenue growth. You can negotiate better deal if the vendor is impressed with the potential of your operations. It is pertinent that vendor is taken in confidence with your vision about the outsourcing assignment and where the deal will head in future.
2. Not monitoring the execution of the Outsourced deal:
Selecting the right service provider doesn’t mean that the company put the entire burden on them. They shouldn’t overlook the work load & try to involve with your IT support provider. When you stop being involved with your IT support provider, requirements not clearly explained and problems are more likely to arise. You must involve in the regular meetings, setting goals & expectations otherwise it may lead to the sufferings in business .Regular meetings are important when you have multiple technology vendors
3. Ambiguous Scope of work: The linchpin of the outsourcing contract is a description of the nature of the work being outsourced, often referred to as the "scope of work”. The project scope must be well defined & understood at both the ends. The service provider must understand the business model. A service provider who sees the bigger picture of the business is always a better choice.
4. Conflicts among parties: Sometimes, there are conflicts between the two parties on certain work issues. If the dispute cannot be resolved through joint problem solving & negotiation, then they must involve a third party. It is more about correcting and preventing mistakes within shortest possible time and moving ahead rather than holding on to an issue. Be open to resolving conflicts.
5. Miscalculation of Costs: Unfortunately, most companies capture costs on a cost element basis (such as salaries, benefits, rent & depreciation) as opposed to activity basis. The outsourcing team must conduct activity based analyses in order to understand the cost of activities. Further, having gathered these costs; the team should make reasonable projections of future costs for these activities. These costs must be added to the provider's pricing. Maximizing these activities will yield more profits & help in making buying & selling decision.
6. Not following the Outsourcing agreement: The concepts in an outsourcing agreement are hard to follow exactly, they generally require a transparency. It is not unusual to come across situations where a concept is well defined in the terms of rules & regulations, but they require a lot of management to complete it .The parties should never make any verbal statements which can bring bad name to their work & status .The solution to this is to ensure that your lawyers talk to the service delivery people
7. Poor Planning in an unplanned manner will surely be a disaster. Proper responsibility and authority should be delegated to the concerned parties to manage the structure. Proper terms need to be drafted to ensure smooth flow of specifications in case of Offshore Software outsourcing. Simultaneously, proper feedback and reporting routines need to be set up.
8. Thinking Outsourcing as the only solution: Most organizations consider IT outsourcing as the only solution because they don’t want to waste their time in non core activities. While outsourcing can indeed ease some operational sore spots, this should not be the main reason for employing the strategy.
9. Not listening to the markets: Companies should never forget that market changes can alter the relative value that outsourcing can offer completely. It is advisable that the management should keep itself updated with the latest market trends so that they do not have to suffer any loss.
